Democrats press Kasich administration on funding for local government, schools

Wednesday

Feb 6, 2013 at 4:00 AM

By Marc Kovac Dix Capital Bureau

COLUMBUS -- Democrats in the Ohio House pressed Republican Gov. John Kasich's administration Tuesday on his $63 million-plus biennial budget proposal, focusing many of their comments on state funding for local governments and schools.

The daylong debate during the House Finance Committee included a number of minority party members pushing for increases in the local government fund, which was cut by half in the last budget bill, and Kasich's budget director making it clear that big increases in such support would not be forthcoming.

"We don't have that budget deficit anymore," said Rep. Dan Ramos, a Democrat from Lorain. "Was that local government fund then and now set because we had hard decisions to make and we needed to cut something or raise taxes ... or is it this administration's belief that the state should and will not provide the same level of support to local governments that it has in the past."

Office of Budget and Management Director Tim Keen offered, "We have a state law system in place that provides the local governments a means to raise revenue to cover their costs. These are decisions that local governments and their citizens ought to make. I think it's appropriate that the taxes are raised by the jurisdiction where the services are provided."

He added, "This budget contains a local government fund at a level that the administration is comfortable with."

Tuesday marked the start of a months-long process that will include lengthy committee hearings followed by lengthy floor debates, with a final vote expected in late June.

The initial House Finance session also marked the start of a new House plan to broadcast the panel's deliberations, with live online streaming of the committee hearings and copies of testimony available for download.

Tuesday's hearing offered a forum for House Democrats to question past cuts to local government funding, with many tying the decrease to the number of tax levies appearing on ballots.

"What's the philosophy on kind of these big tax giveaways to the richest people in Ohio and not investing in what really works, that being K-college education, building infrastructure, site selection and development so that (when) plants want to move (to) Ohio, we've got the work force to fill those jobs," Carney said.

Rep. Mike Foley, a Democrat from Cleveland, added, "Given the cuts that we've had to local governments and school districts across the state, it makes more sense to not make this income tax cuts and funnel that money back into state and local government and cuts we've made throughout the state of Ohio."

But Keen said the tax cuts will enable businesses and individuals to keep more of their money.

"Capital investment matters," he said. "Capital investment drives jobs. Taxation that punishes income, that is a disincentive for capital investment in the state of Ohio. We have very high marginal rates. We have local rates that drive that up. If we want investment, we need capital. The intention behind this tax cut is to drive down tax rates, which will increase the after-tax return on capital invested in Ohio."

Keen also disputed assertions that a halving of local government funds in the last biennial budget was not to blame for local governments seeking levies.

"Was the local government fund reduced? Yes," Keen said. "But the local government fund ... we're essentially talking somewhere about 5-6 percent of the total budgets of the local entities that received these funds. ... I don't consider at 5 percent reduction draconian."

He added, "For those who are critical of the budget choices that had to be made and don't like the fact that there had to be reductions to aid to local governments, the question to them would be how would they have balanced the budget?"

Tuesday's hearing included discussions on a number of other issues, including college tuition costs. Rep. Kathleen Clyde, a Democrat from Kent, asked about a provision that would cap tuition increases at 2 percent, based on average costs of other campuses.

"It looks to me like it could increase more than 2 percent at the four-year universities," she said.

Keen said the language was written to allow universities with lower tuition rates to have larger increases. He said the highest would be Central State University, which could implement a 3.2 percent increase.

Among GOP lawmakers Tuesday, Rep. Robert Sprague, from Findlay, asked about spending increases over the new biennium, noting that the totals appeared to outpace anticipated economic growth.

He also pressed on the state's growing rainy day fund, projected to reach nearly $2 billion this year. The fund, he said, had a similar balance before the recession hit, and it didn't prevent the state from having to make cuts.

"What's the rationale behind putting that cash away instead of, say, spending it on some strategic infrastructure investments or things that could make us more competitive as a state," Sprague said.

Keen said depositing money into the state's rainy day fund at the planned level will prompt an automatic income tax cut, as outlined in state law.

"It's the governor's belief that the personal income tax reduction is productive for our economy," Keen said. "Essentially, what this good management dividend tax cut does is accelerate the three-year phase-in of our personal income tax cut that is part of the bill."

Marc Kovac is the Dix Capital Bureau Chief. Email him at mkovac@dixcom.com or on Twitter at OhioCapitalBlog.